MBB – Robust performance in challenging time – Update

• The bank planned for a 20% increase in FY21F pretax profit and increasing charter capital to approx. VND39trn.
• 1Q21 net profit jumped double yoy to VND3,553bn thanks to impressive growth in all aspects, forming 34% of our full-year forecast.
• Reiterate Add rating with a higher TP of VND41,700 on higher earnings forecasts and higher target P/B for FY21F BV.

AGM 2021 key notes
MBB guides for a 20% yoy increase in FY21F pretax profit to VND13,200bn (equivalent to 88% of our full-year forecast). The bank’s FY21F targets also include: 1) 11% growth in total assets; 2) 10-11% credit growth; 3) maximum non-performing loan ratio of 1.5%. At end-1Q21, the bank had restructured approx. VND2,000bn credit amount (~0.7% total gross loan).

Capital raising plan by 38%
MBB’s shareholders approved the plan to pay a 35% stock dividend for FY21F, which will be executed by the latest 4Q21. After paying share dividends, the bank also planned to issue 70m shares for its strategic partners, Viettel Group and Viettel Store, via private placement. The expected price will not lower than the book value at the most recent audited financial statements. Along with 19.2m shares for ESOP, the bank’s charter capital will surge by 38% to VND38,676bn at end-FY21. The increased capital will be used to upgrade the information system and build a headquarters in the South. For FY21F, the bank plans to pay a 10-15% dividend, but the detailed structure (cash or stock dividend) has not yet been disclosed.

1Q21 earnings: strong on all facets
MBB posted a 45% yoy growth in total operating income, with net interest income (NII) rising 27% yoy and a double surge in non-interest income (non-II). Robust NII growth was underpinned by 8% growth in credit balance and 1% pts decrease in funding cost. In non-II, other income was the main contributor, advancing by 4.0x times higher yoy, as a consequence of prospected bad debt collections. Besides, the bank also reduced its CIR to a historical low of 30.5% at end-1Q21 from 32% at end-1Q20. As a result, MBB recorded a double growth yoy in 1Q21 NP to VND3,553bn, forming 34% of our full-year forecast. For FY21F, we MBB’s CIR would reach a 37% level as a consequence of employee bonus and a new headquarter building.

Raise TP on higher growth prospects and target P/B
We lift our FY21-23F EPS forecasts by 8-13% on lower forecasted CIR. Our TP correspondingly increases to VND41,700, based on our residual income valuation (COE: 15.1%; LTG: 3.0%) and a higher target of 2.0 FY21F P/B

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